Frequently Asked Questions on emissions trading

In addition to European and international treaties, regulations and protocols, the Austrian Act on Emissions Allowances (Emissionszertifikategesetz – EZG), which entered into force in 2004, provides the legal basis for emissions trading in Austria. In the year 2011, it was replaced by the Austrian Act on Emissions Allowances 2011. On 1 January 2005, the EU Emissions Trading Scheme entered into operation. Since 2008, when international emissions trading under the Kyoto Protocol started, emissions trading has been possible not only between companies but also between countries. The purpose of the following FAQs is to answer open questions on the emissions allowance market.

Who may participate in emissions trading?

The main players on the emissions trading market in Austria are installation and aircraft operators that are obliged to participate in emissions trading according to the Austrian Act on Emissions Allowance Trading (Emissionszertifikategesetz –EZG). For every installation or aircraft operator there has to be an operator or aircraft operator holding account in the registry. Apart from operators of installations and aircrafts, every natural person or legal entity is entitled to open a person holding account in the registry and may consequently participate in emissions trading. Person holding accounts are used for example by allowance traders or exchanges. For both the operator and the person holding account fees will have to be paid.

Since the start of international emissions trading in 2008, countries with an emissions reduction commitment under the Kyoto Protocol have also been participating in emissions trading. These so-called Annex B countries include Austria.

What is the difference between the different tradable units?

Currently Austrian account holders may trade the following types of allowances and Kyoto units:

EU Allowances (EUAs): allowances for emissions trading within Europe (European Emissions Trading Scheme). One EUA grants its holder the right to emit one tonne of CO2 (carbon dioxide) or CO2 equivalent during a certain period of time. EUAs can be used for compliance both by installation operators and by aircraft operators.

Aviation allowances: allowances for aircraft operators. One aviation allowance grants its holder the right to emit one tonne of CO2 (carbon dioxide) or CO2 equivalent during a certain period of time. Aviation allowances can be used for compliance only by aviation operators.

Emissions Reduction Units (ERUs) converted from Assigned Amount Units (AAUs) (ERUs from AAUs): Kyoto units that are generated from Joint Implementation projects. The host countries in which projects are carried out convert a number of AAUs into ERUs. These units are then transferred from the registry in the host country to the registry in the investor’s country and are credited to the investor’s account.

Certified Emissions Reductions (CERs): CERs are Kyoto units which are generated from Clean Development Projects. All CERs are issued by the CDM registry.

The following Kyoto units may only exceptionally be held in Austrian operator, person and aviation operator holding accounts. They are subject to special permits:

Assigned Amount Units (AAUs): AAUs are the tradable units of the Assigned Amount (AA) which are allocated to a country with a reduction commitment (Annex B country) under the Kyoto Protocol.

Removal Units (RMUs): RMUs are Kyoto units which are generated in Annex B Parties, e.g. through national afforestation measures and other measures to increase sinks.

What does an emissions allowance look like?

Article 44 of the Austrian Act on Emissions Allowance Trading 2011 (Emissionszertifikategesetz 2011 – EZG 2011) defines an emissions allowance as a commodity. One allowance represents the emission of a certain quantity of carbon dioxide equivalent within a certain period of time. Emissions allowances do not exist as physical securities, but only in electronic form in the registry. Each emissions allowance holds the following information:

Identification of commitment period

Type of allowance (AAU, EUA, aEUA, CER, ERU, RMU)

For CERs and ERUs, the country of origin and the project number of the project under which they have been generated is also indicated.

How do I obtain a permit to emit greenhouse gases as an operator of a stationary installation?

The scope of application of the Austrian Act on Emissions Allowances 2011 (Emissionszertifikategesetz 2011 – EZG 2011) extends to operators of installations that perform activities listed in Annex 1 of the EZG or Annex 1 of the EU Emissions Trading Directive. An application for a permit to emit greenhouse gases must be submitted to the authority that is responsible for issuing permits under the law governing industrial installations. Like these permits for industrial installations, a permit to emit greenhouse gases according to the EZG is issued individually to every single installation.

How do operators of installations or aircraft operators open an account in the registry?

All installation operators who participate in emissions trading, and aircraft operators for whom Austria has been determined as administrating Member State, shall apply for an operator account online in the Union Registry and submit to the team of the Austrian emissions registry the relevant documents including the extract from the companies register, a copy of of authorised users ID and a copy of the installation’s greenhouse gas emission permit.

After checking these documents, the team of the Austrian emissions registry will send the users their enrolment keys. After the account has been activated, allowances can be purchased and transferred to the operator’s account or, in case of free allocations, transferred to the account by the registry administrator (according to the National Allocation Table or the National Aviation Allocation Table).

What information is needed to open an account?

The information requirements for the different account types can be found here.

What account types does an operator of an installation or an aircraft operator need in the registry?

For every installation or aircraft operator an operator holding account has to be created in the registry. This account is comparable to an online bank account. It shows the number of allowances that have been transferred to the installation’s account in case of free allocation (according to the National Allocation Table or the National Aviation Allocation Table) and the number of any allowances that may have been purchased.In addition, operators of installations and aircrafts may open their own person holding or trading account. Carrying out all purchases and sales transactions on a separate person holding account is simpler and gives operators a better overview of all their transactions.

Natural persons and legal entities that wish to participate in emissions trading but are no emitters themselves may only open a person holding or trading account.

How are emissions allowances allocated?

The number of allowances allocated to an installation for the trading period 2013-2020 is determined in accordance with the provisions of the Austrian Act on Emissions Trading 2011 (EZG 2011) and the Austrian Ordinance on the Allocation Rules (Zuteilungsregelverordnung). According to Article 26 of the Austrian Act on Emissions Trading (EZG 2011) the annual allocation of the emission allowances takes place via transfer in the registry.

How do I buy or sell emissions allowances?

Transactions can only be performed via the Union Registry. The registry checks all transfers and ensures that the transfers are in line with the legal requirements for emissions trading. Since an emissions allowance is defined as a commodity, its transfer is subject to the general rules governing the transfer of commodities and ownership. Once an agreement has been reached between the seller and the buyer on the commodity and the price, and once the Union Registry and the European Union Transaction Log (EUTL) and/or the International Transaction Log (ITL) have approved the transfer, the transaction is recorded in the accounts of the parties concerned in the form of an addition of allowances or a deduction. In other words, any agreement between seller and buyer is contingent on the approval of the Union Registry. Only after a transaction has been entered in the registry will an emissions allowance have effectively been transferred (and the buyer have become the new owner).

How are emissions allowances surrendered?

Every installation or aircraft operator must have their emissions verified by an independent verifying body. Every year this verifying body communicates the aggregated emissions per installation or aircraft operator to the competent body and to the Union Registry by the end of March at the latest by entering the emissions data into the Union Registry. For all those installation or aircraft operators for which it has the rights to enter emissions (as assigned by the installation and aircraft operators in the Union Registry), the verification body listed in the registry will enter the emission data into the relevant account. After the competent body has checked the data, the operators of installation and operators of aircraft are obliged to surrender the requisite number of allowances to cover their emissions by April 30th.

What happens if I do not surrender sufficient allowances to cover my emissions?

Article 53 of the Emissions Allowance Trading Act 2011 (Emissionszertifikategesetz 2011– EZG 2011) stipulates that if operators fail to surrender sufficient allowances to cover their emissions from the previous year, they are liable to a penalty of € 100 per missing allowance. In case of non-compliance, the team of the Austrian emissions registry will immediately block the relevant account so that no more allowances or Kyoto units can be withdrawn from the account. However, it will still be possible to transfer allowances or Kyoto units to the relevant account.

At the same time, the competent authority will be informed about the blocked operator account and the penalty procedure will be initiated. Paying the fine, however, does not release the operator from the obligation to surrender allowances to cover the excess emissions. In addition, the names of operators who are non-compliant will be published on the website of the Austrian Federal Ministry of Sustainability and Tourism according to Article 53 of the Austrian Emissions Allowances Act 2011.